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while calculating operating cycle days of Inventory of Raw materials in the lecture you have taken as cost of raw materials purchased as the denominator but in the Kaplan They have taken as cost of Raw Materials consumed which opening stock of Raw materials+Purchase of Materials- Closing Stock Of raw Materials. So what should be taken?
Regards,
RohanIn our opinion either is fine but the:
Cost of Raw Materials Consumed = Opening Stock of Raw Materials + Purchases of Raw Materials – Closing Stock of Raw Materials.
Thus by using this approach is often thought now to provide a clearer picture of the actual usage of raw materials during the period, which is essential for determining how long the inventory lasts.
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